Edmonton Real Estate Forum. Ron Gilbertson President and CEO Edmonton Economic Development Corporation

Transcription

1 Edmonton Real Estate Forum Ron Gilbertson President and CEO Edmonton Economic Development Corporation

2 The Latest Economic News Depression Economic Downturn

3 The Economy What s Going On? Edmonton and Alberta Today Opportunities and Threats The Challenge

4

5 The Economy What s Going On It s Everything Depending Where You Are Depression In December, North American auto production down over 40% from last 10 year average Taiwan exports down 45% in December Crisis Virtual meltdown of global financial system Bank bailouts over past 12 months in excess of one trillion dollars, more required

6 The Economy What s Going On Recession Latest IMF forecast is that world s advanced economies will decline by 2.0% in 2009, followed by modest growth in 2010 Downturn IMF growth forecasts for developing nations China: 6.7% in 2009 (down from 13.0% in 2007) India: 5.1% in 2009 (down from 9.3% in 2007) Brazil: 1.8% in 2009 (down from 5.7% in 2007)

7 The Economy What s Going On Economic Cycle In good times, real temptation to believe the party will never end In bad times, real fear that things will never get better Most experts believe that this is a part of an economic cycle Periodic downturns are part of economic history Usually the bigger the boom, the bigger the bust Most forecasts projecting a return to growth by 2010

8 The Economy What s Going On Correction Recognition that accelerated and sustained economic growth can create serious problems Globally Over-leveraging, Poor lending practises Alberta Labour shortages Dangerous price inflation Infrastructure and service deficits

9 The Economy What s Going On Economic Cycle In good times, real temptation to believe the party will never end In bad times, real fear that things will never get better Most experts believe that this is a part of an economic cycle Periodic downturns are part of economic history Usually the bigger the boom, the bigger the bust Most forecasts projecting a return to growth by 2010

10

11 Where We Are Today EEDC 2009 Economic Outlook Luncheon November 24, We are entering into a recession it s a normal part of the business cycle 2. The downturn will likely be longer and more severe than most originally believed 3. Canada, Alberta and Edmonton will fare better than most

12 Where We Are Today EEDC 2009 Economic Outlook Luncheon 1. Reduced economic activity Alberta s GDP expected Update to decline by 2% in Alberta Increasing and unemployment Edmonton are now being impacted by the downturn Alberta 5.8%, up from 3.4% a year earlier Impact Edmonton is not evenly 4.9%, up distributed from 3.8% a year earlier 3. Government deficits 5. It s not over yet Important to keep things in perspective Province of Alberta projects $4.7 billion deficit for 2009 Expect City of more Edmonton surprises facing deficit Optimists seeing a slowdown in bad news

13 Where We Are Today Overall Economic Performance Overall Economic Performance Edmonton s overall economic activity ranking #1 in Canada # 5 in Canada What changed? Slowdown in population and employment growth Drop in house prices, but increase in MLS sales (year over year) Fall off in housing starts, but significant increase in non-residential construction

14 Where We Are Today Overall Economic Performance Edmonton continues to have important economic strengths Key indexes Unemployment rate - #2 second lowest in Canada Full time employment - #5 fifth highest in Canada Consumer bankruptcies - # 5 fifth lowest in Canada Business bankruptcies - #1 lowest in Canada

15 Where We Are Today 65,000 60,000 GDP per Capita Growth GDP per Capita 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 Edmonton Calgary Toronto Montreal Vancouver

16 Where We Are Today 60,000 55,000 50,000 45,000 40,000 GDP per Capita 2008/2009 Alberta Down 2.3% in % above the Canadian average ,000 30,000 25,000 B.C. Alberta Sask Man Ont Que N.B. N.S. P.E.I. N. & L.

17 Where We Are Today 10.0% 9.0% 8.0% 7.0% Canada Alberta Unemployment Rates March 2009 Canada 8.0% Alberta : 5.8% 6.0% 5.0% Alberta Canada 4.0% 3.0% 2.0% Jun 08 Jul 08 Aug 08 Sept 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09

18 Where We Are Today 6.5% 6.0% 5.5% 5.0% 4.5% Alberta Unemployment Rates March 2009 Alberta: 5.8% Calgary: 5.5% Edmonton: 4.9% 4.0% 3.5% 3.0% 2.5% 2.0% Jun 08 Jul 08 Aug 08 Sept 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Alberta Edmonton Calgary

19 Where We Are Today 40,000 Personal Disposable Income per Capita 35,000 30,000 Alberta 32% above Canadian average 25,000 20,000 15,000 B.C. Alberta Sask Man Ont Que N.B. N.S. P.E.I. N. & L.

20 Where We Are Today 18,000 17,000 16,000 Retail Sales per Capita Alberta Down 2.9% in % above Canadian average 15,000 14,000 13, ,000 11,000 10,000 Canada B.C. Alberta Sask Man Ont Que N.B. N.S. P.E.I. N. & L.

21 Where We Are Today 8,500 7,500 6,500 Housing Starts per Million Alberta Down 23% in % above Canadian average 5, ,500 3,500 2,500 Canada B.C. Alberta Sask Man Ont Que N.B. N.S. P.E.I. N. & L.

22

23 What The Future Looks Like Opportunities and Threats 1. Changing global economy 2. World energy markets 3. Populations and labour forces 4. Critical success factors 5. Edmonton s and Alberta s economy of the future

24 What the Future Looks Like Dramatic shifts in the global economy can be expected over the next 3 to 4 decades These shifts being driven by, or reflected in, changes in: Balance of power Population GDP Globalization A Changing World

25 What the Future Looks Like Balance of Power Cold War A Bi Polar World Recent A Uni Polar World Future A Multi Polar World U.S.A. Europe U.S.A. U.S.A. Russia China U.S.S.R. Japan Gulf States

26 What the Future Looks Like Global Population Changes Population (billions) % 13% Year More Developed Countries India/China Other Less Developed Countries

27 What the Future Looks Like Changing World Economy 400 GDP of Major Nations 2005 and China India United States E.U.

28 What the Future Looks Like Globalization Trend is to increased international trade and interdependence amongst nations Developing nations not standing still Large populations and increasingly educated labour forces Equal access to advanced technologies Improved access to investment capital Important complexities Business environment Distribution of value-add

29 What the Future Looks Like Globalization The ipod Value Chain $224 Wholesale Price Where are revenues are captured Apple: 59% Manufacturers Headquartered In: 32% Japan 8% USA Source: Personal Computing Industry Center: % Taiwan / Korea / Other

30 What the Future Looks Like Global Oil and Gas World Markets Oil Demand 1. In spite of energy conservation and alternative fuels, over the foreseeable future the world remains committed to oil and gas Change in Oil Demand by Region World oil demand expected to rise an additional 25% by 2030 (from 85 to 106 million barrels daily) Demand in industrialized nations expected to decline Major growth in developing nations (China, India, Middle East) as they join the club

31 What the Future Looks Like Global Oil and Gas Markets World Oil Production 2. Globally, roughly 3 decades left to the conventional oil economy While global reserves increasing, the cost of exploration and production rising rapidly (95% increase since 2000) 6 Saudi Arabia s Production from existing sources expected to decline by over 50% by 2030 To offset declines and meet new demands, world needs 6 new Saudi Arabia's by 2030 Long term pricing expected to be in the $100 - $120 a barrel range

32 Alberta What the Future Looks Like Global Oil and Gas Markets 3. Alberta s oil sands are increasingly being 300 viewed as the world s largest and most 250 politically stable source of oil billion barrels 200 Alberta 150is second only to Saudi Arabia in terms of total proven reserves 100 Alberta represents over 50% of the world s privately 50 developable oil reserves 0 Cost escalation and environmental issues are critical to the long term development potential of heavy Alberta s oil Reserves 174 Billion Barrels Saudi Arabia Canada Proven Oil Reserves Iraq Venezuela Russia Mexico

33 What the Future Looks Like Populations and Labour Forces In virtually all industrialized nations, labour forces being impacted by 2 macro trends: Declining populations Aging populations As a result, in these nations unemployment levels are approaching all time lows Over the coming 50 years, labour shortages will be one of the most important challenges to be faced by industrialized nations

34 What the Future Looks Like Education Western world no longer has a monopoly on advanced education Innovation, productivity, global reach all are directly impacted by education levels Innovation Critical Success Factors The primary driver of new market opportunities, and productivity and efficiency gains, will be innovation Innovation is as much a culture as anything else

35 What the Future Looks Like Global View Critical Success Factors Need to recognize that both competition and markets will be increasingly global Success will be dependent on identifying both opportunities and threats within a global context Entrepreneurial Having the drive or incentive to create new market and business opportunities, and to be competitive, essential to future success Developing an entrepreneurial culture is essential

36 What the Future Looks Like Edmonton s Economy of the Future We are becoming more productive We are benefiting from higher incomes We are becoming better educated We are growing as a centre of economic activity Health care Education Advanced Technology Oil and Gas, and in particular Oil Sands Financial Services and Investment Management

37 What the Future Looks Like Critical Success Factors In the Future We won t be able to compete in terms of: Cost Labour availability Access to markets Technology access In the Future To be competitive, we need to rely on: Innovation Productivity Flexibility Competitiveness

38 What the Future Looks Like What This Means for Edmonton The current recession is part of a cycle We can expect a slowdown, but we also need recognize that there will be a recovery Individuals, companies and governments need to manage prudently Use this time to plan and prepare for future growth The world and the global economy will change significantly in the future Important that Edmonton understand these changes and their impact on our economy Important that we begin to think and act like a global player

39 What the Future Looks Like What This Means for Edmonton Alberta is increasingly being recognized as an energy superpower Oil will continue to be a valued source of energy for the foreseeable future Alberta can expect to become one of the world s largest, and most secure, suppliers of oil and value added products We need to do a better job controlling costs and managing the pace of development Environmental issues are real, and if not dealt with, pose a serious threat to Alberta s energy industry

40 What the Future Looks Like What This Means for Edmonton Availability of labour is critical Shortage of skilled labour is one of the most important long-term challenges faced by the Alberta economy Need continuing emphasis on education and training Edmonton s economy of the future To sustain our quality of life and income levels, working harder and longer won t be enough We have to understand and embrace the critical success factors Our focus has to be on: innovation, productivity, flexibility and competitiveness

41 Manufacturing Real Estate Agriculture Construction Real Estate Hospitality F.I.R.E. Education F.I.R.E. Education Core Sectors in the Future Tourism Tourism Health Care Health Care Advanced Technology Advanced Oil Sands Technology Oil Sands Professional Services Utilities Transportation & Logistics Entertainment Engineering Retail

42

43 What the Future Looks Like Where Do We Want to be 20 Years? 1. Establish a sustainable and internationally competitive economy 2. Offer high quality employment opportunities and good incomes 3. Provide citizens with a world class quality of life 4. Be globally recognized as a leading city

44 What the Future Looks Like Setting a Goal To have Edmonton become recognized as one of the world s top 5 mid sized cities

45 The Challenge The World s Largest Cities City Type and Size Type Population North America Number of Cities Rest of World Total Mega 20.0 M Plus Very Large M Large M Intermediate M Mid-Size M Total

46 The Challenge Who are the Benchmarks? Who is our Competition? Munich Lyon Orlando San Antonio Abu Dhabi Pretoria Stockholm Vancouver New Orleans Cologne Calgary Amsterdam Xiamen Glasgow Dubai Copenhagen The Hague Auckland Memphis Oslo Ottawa Fukuoka Columbus Brisbane

47 Conclusion Thank you for attending today Enjoy the rest of the Luncheon